Functions of forex management
The foreign exchange market is merely a part of the money market in the financial centers is a place where foreign moneys are bought and sold. The buyers and sellers of claims on fore' money and the intermediaries together constitute a foreign exchange market. It is functions restricted to any given country or a geographical area. Thus, the foreign exchange market is the market for a national currency foreign money anywhere in the world, as the financial centers of the world are united in a single market. There is a wide variety of dealers in the foreign exchange market. The most important amongst them are the banks. Banks dealing in foreign exchange have branches with substantial management in different countries. Through their management and correspondents the services of such banks, usually called 'Exchange Banks', are available all over the world. These banks discount and sell foreign bills of exchange, issue bank drafts, effect telegraphic transfers and forex credit instruments, and discount and collect amounts for such documents. Other dealers in foreign exchange are bill brokers who help sellers and buyers in foreign bills to come together. They are intermediaries and unlike banks are not functions dealers. Acceptance houses are another class of dealers in foreign exchange. They help foreign remittances by accepting bills on behalf of customers. The central bank and treasury of a country are also dealers in foreign exchange. Both may intervene in the market occasionally. Today, however, those authorities manage exchange rates and implement exchange controls in various ways. In India, however, where there is a strict exchange control system, there is no foreign exchange market as such. Forex basic function of the foreign exchange market is to facilitate the conversion of one currency into another, i. This transfer of purchasing power is effected through a variety of credit instruments, such as telegraphic transfers, bank drafts and foreign bills. In performing the transfer function, the foreign exchange market carries out payments internationally by clearing debts in both directions simultaneously, analogous to domestic clearings. Another function of the foreign exchange market is to provide credit, both national and international, to promote foreign trade. Obviously, when foreign bills of exchange are used in international payments, a credit for about 3 months, till their maturity, is required. A third function of the foreign exchange market is to hedge foreign exchange risks. In a free exchange market when exchange rates, i. Under this condition, a person or a firm undertakes a great exchange risk if there are huge amounts of net claims management net liabilities which are to be met in foreign money. Exchange risk as such should be avoided or reduced. For this the exchange market provides facilities for hedging anticipated or actual claims or liabilities through forward contracts in exchange. A forward contract which is normally for three months is a contract to buy or sell foreign exchange against another currency at some fixed date in the future at a price agreed upon now. No money passes at the time of the contract. But the contract makes it possible to ignore any likely changes in exchange rate. Preserve Articles is home of thousands of articles published and preserved by users like you. Here you can publish your research papers, essays, letters, stories, poetries, biographies, notes, reviews, advises and allied information with a single vision to liberate knowledge. Before preserving your articles on this site, please read the following pages: Home About Site Preserve Your Article Content Quality Guidelines Disclaimer TOS Contact Us. What are the Functions of the Foreign Exchange Market? Functions of the Foreign Exchange Market: The foreign exchange market performs the following important functions: The existence of a forward market thus makes it possible to hedge an exchange position. Which Indian companies have become MNCs with the competition in globalisation? What are the Methods used in reclamation of wastelands? Guidelines Forex Site Content Quality Guidelines Terms of Service Privacy Policy Disclaimer Copyright Recent Articles. Use of this functions site constitutes acceptance of the Terms Of Use and Privacy Policy User published content is licensed under a Creative Commons License.
When the agent is more than one word long, the passive voice is even more concise than the active.
Mostly they are useful for facts or for contemporary quotes and are usually not good sources of analysis.
Overall, I believe my parents have, although verbally, not been supportive, they have always been okay with my decisions, because they trust my rationale.